New Delhi, September 4 (Kiran News). The GST Council has approved major changes in the Goods and Services Tax (GST) structure, paving the way for reduced prices of small cars and motorcycles. The revised rates will come into effect from September 22, the first day of Navratri.
Union Finance Minister Nirmala Sitharaman announced the decisions after the 56th meeting of the GST Council. Revenue Secretary Arvind Srivastava explained that under the new structure, petrol, LPG and CNG cars with engine capacity below 1,200 cc and length under 4,000 mm, as well as diesel cars with engines up to 1,500 cc and length up to 4,000 mm, will now attract 18% GST instead of the current 28%.
Similarly, motorcycles with engine capacity up to 350 cc will also come under the 18% GST bracket, down from 28% earlier.
Srivastava further said that vehicles with engine capacity above 1,200 cc and length over 4,000 mm, motorcycles above 350 cc, and racing cars will attract GST at 40%. Small hybrid cars will also benefit from the revised structure, while electric vehicles will continue to be taxed at 5%. In addition, GST on automobile parts has been reduced from 28% to 18%.
Welcoming the decision, Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, said in a statement, “The government has addressed the long-standing demand of the auto industry to rationalise GST rates. This is a progressive step that will boost consumption, provide much-needed stimulus, and accelerate the growth of the automotive sector. Overall, it will also support the economy.”
Currently, vehicles fall under the highest GST slab of 28%, with an additional compensation cess of 1% to 22% depending on engine capacity and length. As a result, the total tax on small petrol cars stands at around 29%, while for SUVs it goes up to nearly 50%.
Bhupendra Singh Chundawat is a seasoned technology journalist with over 22 years of experience in the media industry. He specializes in covering the global technology landscape, with a deep focus on manufacturing trends and the geopolitical impact on tech companies. Currently serving as the Editor at Udaipur Kiran, his insights are shaped by decades of hands-on reporting and editorial leadership in the fast-evolving world of technology.
